Vikram Mehta Interview for Red Herring Spring Conference, Monterey, California

by Sean Wolfe

May 2, 2007

Link to version on Red Herring’s site.

Video in WMV Format: Small | Large

SW: Hi. I’m Sean Wolfe and joining us today is Vikram Mehta. He is the CEO of Blade Networks which is a server networking company that’s focused on the data center space. Interesting thing about this company, of course, was that you founded it while it was still a division of Nortel…

VM: That’s correct, Sean.

SW: Yeah. That’s back in ’02. And then you left to join Garnett & Helfrich which has made a speciality of hollowing out interesting IP within other companies and wrapping it in money and management and making a new, full fledged company out of it. Data centers are expensive to run. They are generally energy inefficient…in this age of clean tech that’s problematic. You’re coming out with a new concept. Tell us what it looks like.

VM: So what Blade Network Technologies is doing, Sean, is really revolutionizing the way servers connect to the network. We’re trying to address some fundamental problems associated with space, associated with power, and associated with cost of ownership.

SW: What are the key differentiators and how is it working?

VM: So what Blade Network Technologies essentially does is provide the IO fabric for server systems, specifically scale-out server systems such as blade server systems from leading vendors like IBM and HP and essentially provides a very very unique and cost-effective way for these server systems to connect to the outside world.

SW: So let’s go into the TCO issue. Let’s go into the power saving issue. How do you pull that off?

VM: Well, what Blade Network Technologies has essentially done has solved some of these issues. We’ve taken our networking technology and put it inside the blade server chassis so we’ve completely eliminated the extra space that was traditionally taken up by networking gear. Our technology is about 80% more power efficient and requires less air conditioning compared to conventional networking equipment that customers can buy from leading vendors like Cisco. And we’re offering twice the performance at half the cost of traditional networking vendors. So we’re addressing some of the key points…key pain points…that a lot of enterprises are facing out there in the marketplace.

SW: What kinds of customers are snapping up your stuff?

VM: Fortune 500 companies. We are supplying to over 2,500 of the largest organizations in the world. Leading Wall Street firms. Leading organizations on Canary Wharf. The biggest transportation companies. Leading retailers around the world. Just about anybody that is interested in deploying scale-out server technology is going to be interested in our products.

SW: So what’s the revenue picture like for you guys? Are you guys cash flow positive?

VM: So we are generating cash. We have more than doubled our head count over the last twelve months.

SW: How many folks are you up to now?

VM: We’re now up to 110 people…

SW: Wow.

VM: And we’ve taken market share from the competition so it’s a wonderful story.

SW: And you’re profitable?

VM: We’re profitable.

SW: How big a business do you think you can evolve this to?

VM: Well, if you look at…if you look at the whole server space, industry analysts predict that by 2010, blade servers will be a ten billion dollar market. For every dollar that customers spend on server blades, they’re spending between fifteen and twenty cents on networking. So this could be well over the three to four billion dollar addressable market and we hope to get our fair share of it.

SW: In terms of going after specific verticals, are you devoting yourself to one…

VM: So Sean, there’s a few interesting markets that I think make a lot of sense for us. Virtualization. We play a very key role in that space.

SW: VMWare is one of your partners?

VM: Absolutely. Spaces like massively multiplayer online gaming. High performance computing. As well as the emerging world of media and entertainment. Applications like IPTV, Video on Demand. These are all wonderful applications for server blades and we’ve got just the right networking products to help the enterprises enable these sorts of applications in their environment.

SW: Obviously you have huge rivals in there. You’ve got Cisco. You’ve got Force10. And you’re trying to compete with them on price and efficiency. Nonetheless, they have marketing budgets that destroyed the landscape. So doesn’t that create a challenge for you?

VM: Well I think our value proposition out there is not just one of price performance. It’s about unique software IP as well. We’ve got some tremendous software intellectual property. We understand servers. We understand a lot about server networking and we’re including some very very unique and differentiated features in the products that I think will allow us to garner a growing share of this market.

SW: I’m curious about what keeps you awake at night as you try to grow this business out?

VM: The thing that sort of keeps me awake at night is worrying about the myriad customers issues and trying to stay one step ahead, not only preempting some of the problems that our customers are facing but also making sure that we can come to market with solutions a lot faster than our competitors.

SW: Well, Vikram, it’s good to sit with you. It’s good to talk to you again.

VM: Well, thank you so much.

SW: And congratulations on the Red Herring 100 win.

© 2007. Red Herring. All rights reserved. Used here with permission.